Sree Gokulam Chit and Finance Co. Pvt. Ltd. Vs Tax Recovery Officer (Madras High Court)
Madras High Court held that Tax Recovery Officer doesn’t have authority to declare mortgage as void-ab-initio. Tax Recovery Officer can only enforce attachments under the Income Tax Act. Accordingly, this writ petition is disposed of.
Facts- An immovable property was purchased by the third respondent herein under sale deed dated 26.02.2016 from Perfect Medical Enterprises (P) Limited. The third respondent had earlier filed the return of income for the Assessment Year (AY) 2011-12 electronically on 08.02.2012 admitting a taxable income of Rs.8,55,710/-. After being selected for scrutiny, notice u/s. 143(2) was issued on 31.07.2012. Pursuant thereto, an assessment order u/s. 143(3) was issued on 31.03.2014 raising a demand of Rs.2,64,00,385/- along with penalty of Rs.10,000/- u/s. 272A(1)(c) and interest of Rs.57,74,710/-. Notice in ITCP-1 under Rule 2 of the Second Schedule to the I-T Act was issued by the TRO to the assessee in default/third respondent on 24.02.2016. Such notice was received by the third respondent on 26.02.2016.
As security in relation to amounts due in present or in future to the petitioner of the value of Rs.50,00,000/-, the third respondent created a mortgage by deposit of title deeds in favour of the petitioner. Such mortgage was evidenced by memorandum of deposit of title deeds dated 16.11.2016 (the MoDT). The property described in paragraph 1 above was the property mortgaged in favour of the petitioner. Thereafter, in 2018, the third respondent and his wife stood as sureties in respect of a loan taken by a partnership firm, Vimal Enterprises, from the petitioner.
